An Individual Savings Account (ISA) remains one of the most effective ways to save or invest tax-efficiently in the UK. Yet every year, many people fail to use their full allowance and once the tax year ends, that opportunity is gone.
With the 2025/26 tax year ending on 5 April 2026, now is the time to check whether you’ve fully used your £20,000 ISA allowance.
Why ISAs Matter
An ISA acts as a protective wrapper around your savings and investments. Any interest, dividends or capital gainsearned inside an ISA are free from UK tax. That means more of your money stays invested and working for you.
You can:
- Place the full £20,000 into one ISA
- Split it across multiple types of ISA
- Combine cash savings with investments
The flexibility makes ISAs suitable for both short-term goals and long-term wealth building.
Understanding Your ISA Options
There are several types of ISA available, each designed for different needs.
Cash ISA
Works similarly to a savings account but with tax-free interest. Suitable for short-term savings or those who prefer lower risk.
Stocks & Shares ISA
Allows you to invest in funds, shares and bonds. Returns remain free from Income Tax and Capital Gains Tax. This option may suit investors willing to accept market fluctuations in exchange for growth potential.
Lifetime ISA (LISA)
Designed to help first-time buyers or those saving for retirement. It currently includes a government bonus, although there are proposals to replace it with a new product focused solely on first-time buyers.
Innovative Finance ISA (IFISA)
Involves peer-to-peer lending and carries different risks and rules.
Choosing the right ISA depends on your time horizon, financial goals and tolerance for risk.
Important Changes to Cash ISAs
Following the Autumn Budget 2025, changes are coming:
- From April 2027, the annual limit for new contributions to Cash ISAs will fall to £12,000 for individuals under 65.
- Those aged 65 or over can continue contributing up to £20,000 annually.
- The overall ISA allowance remains £20,000.
However, new rules will prevent transfers from Stocks & Shares ISAs or IFISAs into Cash ISAs. In addition, interest earned on cash held within investment-focused ISAs will become taxable.
These changes are designed to encourage younger savers to consider long-term investing while still protecting older savers who prefer cash-based security.
The ‘Use It or Lose It’ Rule
Your ISA allowance does not roll over.
If you don’t use your 2025/26 allowance by 5 April 2026, it is lost permanently. That means missing out on valuable tax-free growth year after year.
Even partial use of the allowance can make a meaningful difference over time.
Is Your ISA Strategy Aligned With Your Goals?
ISAs are powerful, but they should form part of a broader financial plan. Whether you’re building wealth, generating income, or balancing risk and growth, the structure of your ISAs matters.
With multiple options available and rule changes on the horizon, reviewing your strategy now can help ensure your money is positioned effectively for the years ahead.
If you’d like guidance on selecting the right ISA or making the most of your allowance before the deadline, Vision Wealth is here to help.
Get in touch to ensure your ISA strategy is working as hard as you are.
